Quinn's office ignored red flags on nonprofit

The Quinn administration handed out $800,000 in anti-violence money to a politically influential South Side community group even after the nonprofit filed documents with the state acknowledging it suffered from years of financial missteps, a Tribune investigation found.

The governor's office did not heed red flags surrounding the nonprofit long run by a pastor with close ties to Illinois' top Democrats, records show. The state now says nearly a third of the money awarded to The Woodlawn Organization should be repaid.

The findings come from a review of hundreds of records and are the latest in a series of problems uncovered in Democratic Gov. Pat Quinn's $54.5 million grant program — conceived amid a tight 2010 election race and now a political distraction as he runs for re-election. Challenger Bruce Rauner has portrayed the program as an example of Quinn's failures as governor.

A report by Auditor General William Holland this year excoriated the anti-violence program, formally known as the Neighborhood Recovery Initiative. Holland chided it as hastily thrown together, grossly mismanaged and replete with financial irregularities and poor bookkeeping. State and federal prosecutors are sifting through records of the program, which gave cash to scores of nonprofits, while a special bipartisan legislative commission is dissecting the program's woes.

The Woodlawn Organization drew distinction in the report as the first major player in Quinn's initiative to run into problems — offering a hint of the wider failures that would eventually be exposed.

The Tribune's investigation found that on the same day The Woodlawn Organization applied to Quinn's program, it filed records of internal audits with the attorney general's office that showed a history of missteps, including misspending other government money.

The newspaper has documented how the longtime nonprofit got the grant despite its questionable finances, then handled the money in ways that sparked complaints from state officials, from missing bread-and-butter documents such as bank statements to spending money on fast food. Records showed that, as part of the grant program, the group even touted sending a busload of people to lobby in Springfield. Its mission? Ask lawmakers to keep the money flowing.

The records also raise questions about when top Quinn administration officials learned of problems in the program and how swiftly they responded.

The Woodlawn Organization was long run by the Rev. Leon Finney Jr. or, in later years, his wife, Georgette Greenlee. The South Side minister has won admirers and critics in a decadeslong career as a community and political organizer — becoming a fabric of Chicago and Illinois politics while he or his firms have given more than $200,000 since 1995 to various candidates, including Quinn. He also recently lent his name as a plaintiff to a lawsuit challenging ballot proposals that, if passed, could hurt Democrats' tight grip on power in the statehouse.

Quinn's office said that politics had nothing to do with the anti-violence grant and that the governor has worked hard to reform such programs while collecting missing cash.

A spokesman for Finney, Jerry Thomas, said Finney cultivated close relationships with politicians to best achieve his sole goal: helping the less fortunate. Finney's wife, through her attorney, also argued her husband's political donations haven't bought special treatment, noting the state has considered her jointly liable for back wages owed to some nonprofit employees.

Thomas argued the woes surrounding the grant program should be put into a broader context. "We shouldn't penalize community leaders because one program might fail, and mostly due to funding challenges," he said.

But a point man for Republicans, state Sen. Jason Barickman, called what happened with the nonprofit "a shameful use of tax dollars."

"The cozy relationship between the politics and the not-for-profits is clearly something that the legislature will need to address," said Barickman, a Bloomington lawmaker who co-chairs the commission reviewing the auditor general's report.

Red flags and politics

Fueled largely by government grants, the Woodlawn nonprofit became a one-stop shop for decades in fighting the social ills of a neighborhood — just south of the University of Chicago — that has long been one of the poorest and most violent in the city. Working with the nonprofit was an offshoot, Woodlawn Community Development Corp., which used government financing to develop and manage housing.

Finney ran both for years until handing the reins of The Woodlawn Organization to his wife in 2008. By 2010, the power couple was paid a combined $293,000 a year to run the nonprofits. Finney also ran side businesses, two of which were paid a combined $190,000 by the nonprofits for rent and food. Such deals led to unflattering media reports, which Finney's supporters brush off.

Thomas said the 75-year-old Finney is "truly a dedicated community advocate who, even at his golden age, works tirelessly, around the clock, for the betterment of many."

John Hooker, a fellow plaintiff in the ballot lawsuit, called Finney an "honest person" and a "man of the community."

But the nonprofits were dogged for years by complaints of mismanagement, such as misspending money, improperly dipping into restricted funds and failing to meet payroll. In filings sent to the attorney general's office, The Woodlawn Organization's management blamed its woes on a cash-starved operation trying to juggle costly projects.

But more cash was soon to come. As Quinn was trying to win re-election in 2010, records show he met with South Side ministers and launched the ambitious anti-violence grant program on a hurried timetable — with Chicago aldermen helping to pick who got invited to oversee the program in neighborhoods.

Ald. Willie Cochran, 20th, picked The Woodlawn Organization. Cochran said he did so because the nonprofit fit the criteria pushed by the state, which was supposed to vet the agencies.

Among state requirements was that nonprofits be "fiscally sound."

Lobbying for more

Six months into the contract, the nonprofit reported its subcontractors had yet to hire any children or parents for mentoring and training — two key components of the governor's program.

But the nonprofit did boast that it had taken 36 "community members and representatives from community organizations and schools" on a coach bus to Springfield to push for more funding. The nonprofit printed a flier stumping the trip as a way to "ensure that our elected officials understand the value and long-term cost effectiveness" of such grant programs.

As the year wore on, the nonprofit's internal woes worsened. Records show the state Department of Labor began citing it for failing to pay promised wages to employees. And an anonymous employee tipped off another state agency giving the nonprofit money, the Department of Human Services, to more problems.

Agency spokeswoman Januari Smith told the Tribune that Human Services auditors found the nonprofit at the time was "falsifying clinical data" while falsely claiming to provide services to people who didn't get the help, amid "serious financial difficulties." She said the problems were so severe the agency alerted a higher-level investigatory agency, the state's Office of Executive Inspector General.

State emails show discussions of those "major mismanagement" problems reached at least as high as Toni Irving, the governor's deputy chief of staff, in November 2011. A week later, the governor's office suggested that the agency overseeing the anti-violence grant do its own audit.

That second audit found anti-violence grant records were disorganized, with key documents missing that mightjustify some expenses. Budgets conflicted with each other and didn't add up to the full amounts the state provided. And the group was weeks behind on payroll.

Among the problems: a $10,700 check written to an unidentified staff member to cover an unspecified ComEd bill; allowing a subcontractor to use state money to give $2,000 worth of American Express gift cards to its workers; and using state money to buy about $200 worth of fast food for a program that had only two participants.

Greenlee declined to answer specific questions about the findings, but her lawyer, Christopher Kendall, said in a statement that she had worked in "good faith" to carry out the mission of the group, often known by its initials TWO.

"As TWO suffered financial and bureaucratic setbacks, Ms. Greenlee worked to address those issues as best she could," Kendall said.

Questions of timing

In January 2012, The Woodlawn Organization was ordered out of the anti-violence program and soon shuttered.

It was the first major nonprofit to close amid allegations of misspending, and the timing of that order raises questions about when the governor learned of problems in his signature anti-violence grant program.

His office has said he first learned of those problems in June 2012. That was more than six months after emails show one of Quinn's former advisers, Irving, discussing concerns with the Woodlawn group and the anti-violence grant program, and more than four months after the group was removed from the program.

When asked why the governor didn't learn of the woes sooner, Quinn spokesman Grant Klinzman reiterated that he "learned about the need for stronger grant oversight" and troubles with the program in June 2012. He said Irving was one of 10 deputy chiefs of staff, and all those associated with the grant program have left the administration.

Klinzman said the administration has recovered about $3.3 million owed by groups involved in the anti-violence program. The $238,000 owed by TWO is part of $689,000 the state still is seeking to recover.

"We've taken the issue of the now-defunct NRI program's mismanagement and oversight shortcomings extremely seriously," Klinzman said in a statement issued Friday.

He said that politics played no role in the government decisions regarding TWO and that the overall program was a "sincere effort to help combat a very serious epidemic of youth violence in 2010."

In the meantime, Finney and firms associated with him have continued giving to politicians nearly $20,000 in the past year, including $500 to Quinn and $5,000 to House Speaker Michael Madigan, D-Chicago.

Campaign finance expert Kent Redfield, who teaches at the University of Illinois at Springfield, said relationships with politicians lead to "situations where it looks like you're cross-pressured between loyalty and friendship and obligations on one hand and the public interest on the other."

As of now, the state says The Woodlawn Organization owes not just the $238,000 from the anti-violence grant, but also nearly $270,000from Department of Human Services grants and nearly $24,000 from a Department of Natural Resources grant.

Of the more than $500,000 owed the state, the attorney general's office said it has received an official referral to try to collect only the $24,000. Records show the agency has sent four letters since September to the defunct nonprofit, addressed to Greenlee, to try to informally get the cash back before having to file a lawsuit.

Little has been done to collect on the anti-violence grant. The state agency now in charge of that program — the Illinois Criminal Justice Information Authority — has not formally referred the case to the attorney general's office for collections. A spokeswoman said the authority's office was short-staffed and busy trying to collect from other nonprofits deemed more likely to pay up but has begun talking with the attorney general's office about the Woodlawn grant.

The last official action on the anti-violence grant came 12 months ago, when a state hearing officer formally declared The Woodlawn Organization owed the state the $238,000. There is no record of a response from the nonprofit.

But, two days after the ruling, the Finney household did cut a $250 check to Quinn's campaign.

After the Tribune asked about that donation and others, a Quinn spokeswoman said the governor hadn't been aware of the money owed to the state, and the contributions were "absolutely not" connected to government actions. But, she said, "out of an abundance of caution," the Quinn campaign would respond to various recent contributions with a $2,000 donation to charity.

SPRINGFIELD — Gov. Pat Quinn today defended his $55 million anti-violence program now under scrutiny by a Cook County grand jury, saying he is not going to turn his back from public safety needs in Chicago and other urban areas.